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Strategies & Market Trends : ZenWarrior's Trading Paradise -- Ignore unavailable to you. Want to Upgrade?

To: manfmnantucket who wrote (373)	4/4/2001 8:53:40 PM
From: p40warhawk	Read Replies (2) \| Respond to of 2462

Mfn You say, "yes of COURSE we can make a transaction! I can meet you on Island right now and put out an offer and you can match it and we'll have our deal." Ok, if you say it can be done that way, I won't argue it. I'll just say I have never seen it done that way. I certainly have never bought or sold a stock that way. Would I be correct if I said MOST of us deal through a market maker? I said, "The "moral" factor comes into play when you sell Zen the card for 8 dollars when you have good reason to believe it is not worth that much." You responded, "But he has reason to think it's worth that and more,obviously...." But, NORMALLY, when you short a stock, don't you borrow the stock from your broker, NOT another stockholder? If you are qualified for shorting, does the broker have any choice but to lend you the stock? Then, when you successfully buy it back cheaper and present the repayment to the broker, does he have any choice but to accept it? Did the broker have ANY defense when you decided to short that stock? It isn't good enough to say that the broker knows the rules of the game and he got in the profession on his own. I am looking at underlying principles which are at play here, and I am trying to determine if there are moral considerations that outweigh what we can do legally or through mutual agreement. That's the burr under my saddle right now. You said, "In the example, my "short" was based just as much on the guess that the room had run out of money - Zen could have known otherwise." No way Zen could have known otherwise, because the numbers were quantifiable and known. True, this is not the case in the real world. I have never denied that the shorter runs a risk. You said, "What about when I paid you less than I believe it's going to be worth? The same situation applies - I am acting on a belief that the price will go up. You are seeing the same info but think the price I offer is high enough - so you may take the loss selling and I profit. Is that immoral?" As I understand it, a company makes its shares available through a market maker or other avenues. It does so because it needs investment money NOW. It offers the stock at its CURRENT market value in hopes that I will be attracted by its FUTURE value. The company is NOT selling me the stock, or providing a way for me to have the stock, because it thinks it will go down. The company and I both hope it will go up. We both run the risk that it might not. You conclude, "Please indulge me here, because I think this is an important example that gets at a lot of the myths people have about stocks. It exposes the notion of value and shows how it's a zero-sum game. Apart from the number of participants, the mechanics are identical - and I haven't seen a real challenge to this claim yet." Well, I don't believe it is a zero-sum game. It isn't zero sum, and it isn't a game, EXCEPT to the extent that the market has been compromised with too many features that allow the "riverboat gambler" element to come in and change the character of investment. All in the name of added liquidity, or "more money for everybody." I find that very sad. I wonder if you would argue in favor of gambling in Las Vegas as strongly (and well) as you make your arguements. here? You probably would, for I can see very little difference between Vegas and your characterization of the stock market. AND, I don't question the accuracy of your characterization. What do I tell my grandson ten years from now when he asks me how I made my retirement next egg? Why, I just say, "Son, I just outsmarted all those suckers." Or, I might say, "Son, it would have been much bigger, but those sharks on Wall Street stole most of it." Hurrah for capitalism. p40warhawk